MOUNT VERNON – The Mount Vernon Board of Education voted unanimously on Monday night to pass a resolution for a replacement tax levy that would effectively redirect revenue from an expiring bond issue to the district’s Permanent Improvement fund.

The levy, which will likely be placed on the May 2019 ballot (pending an additional board vote and Board of Elections certification), would not raise taxes for district residents.

The reason behind the levy

The district will have paid off its lone bond issue – which was approved in 1993 to fund the construction of Mount Vernon Middle School, costing the district $10.9 million over 25 years – on Dec. 1, 2019.

District residents are paying $3.99 per month (per $100,000 home) in taxes to pay off the school, giving the district $838,662 each year for that purpose (which includes approximately $100,000 of state reimbursement funds). With the bond set to expire next December, the school board began mulling different options in order to redirect the revenue for a different purpose: Permanent Improvement projects.

The board met with David Conley, president of Rockmill Financial Consulting, LLC, in a special meeting on Sept. 15 to discuss options. Conley described the idea of redirecting tax revenues after the expiration of a bond issue as commonplace among school districts.

“Many school districts look at opportunities like this as an opportunity to say to taxpayers, ‘If you will agree to continue paying me that amount of money, we can use it in a different way,'” Conley said at the meeting. “And it’s described in some cases as a ‘no-increase-in-taxes levy’ of some sort.

“I describe it to my clients as an agreement that is, in fact, a continuation of an existing tax. So to a degree, it is an increase in taxes in that they are going to pay more than they would have paid over time, but it’s still within the current budget of what they’ve been paying on a monthly basis.”

Monday’s vote

On Monday, the board had narrowed the five levy options it considered in September down to two: a ‘replace and increase’ levy and an ‘additional PI levy.’ Despite potential confusion based on the ballot language, each option would do the same thing; taxpayers would continue to pay the same amount they had been paying for the Middle School bond issue, but it now would go towards the PI fund.

Treasurer Judy Forney said that, because the state only offers reimbursements for bond issues, not PI levies, the new levy would bring in approximately $700,000 each year for the district’s PI fund.

Superintendent Bill Seder said PI funds are typically used for essential transportation, technology, curriculum and facility upgrades within the district. While $700K is not enough to build a new school (most cost well over $25 million with rising construction costs), it is enough to make substantial improvements to existing buildings.

Seder estimated in September that the district makes around $950,000 annually on its existing PI levy, which means that these redirected funds would nearly double that amount.

“This (PI) money goes pretty quick on what I would call just ‘operational’ types of things,” Seder told the board Monday. “This additional money would serve to be very beneficial moving forward.”

The board’s first option, ‘replace and increase,’ would replace the district’s current PI levy with revised millage (based on up-to-date property values), and then increase it from 2 to 2.9 mills in order to bring in the same amount of money that had been used to pay off the bond issue.

Its second option, ‘additional PI levy,’ would leave the existing PI levy alone and start a new one. It would be a 1.25-mill levy that would bring in the same amount of money and direct it toward the same place, the PI fund.

Both levies would be continuous, both would cost taxpayers the same amount (still $3.99 per month) and both would be used for the same purpose. The board’s challenge was deciding which one voters would be more likely to accept.

After discussing it amongst themselves and taking advice from the district faculty in attendance, the board decided to recommend the ‘replace and increase’ levy because it may sound more appealing to voters.

Board and faculty members agreed that, when voting, the first word of a tax issue item is of the utmost importance, and that ‘replacement’ sounds less costly than ‘additional,’ even though both would cost the same and would not increase taxes for district residents.

What’s next

Forney reminded the board that millage totals in the proposals are estimates, and that she will now take the resolution to the county auditor’s office and they will determine the exact millage needed to generate the desired dollar amount.

Once the board knows the exact millage, dollar amount and purpose of the levy, it will vote to pass a second resolution during its next meeting – Jan. 14 – which will include the finalized numbers. Once that final resolution is passed, Forney can file it with the Knox County Board of Elections by the Feb. 6 deadline, so it can be certified and placed on the May 2019 ballot.

Putting the levy on the May ballot (and getting it passed) is important because it would allow the district to maintain the year-to-year revenue it had been receiving from the bond issue. It would provide a seamless transition for taxpayers, who would simply continue paying the same amount they had paid for the last 25 years.

Failure to pass the levy would cause a gap in time between the expiration of the bond issue and the issuing of the replacement levy, which would technically introduce an increase in taxes. This would be much harder for the district to pass.

The district and school board have already begun the process of evaluating facilities for improvements. The district issued a two-week, public ‘Thought Exchange’ on its website to gauge community feedback, while the board has toured every school in the district this year after meetings to gain feedback from teachers and administrators.

The board maintained that, like any levy, marketing would be key. The district will need to properly inform residents of the meaning behind the ballot language if it wants the issue to pass.

“Again, the idea is pretty simple. We don’t want to increase taxes,” Seder emphasized. “We want to continue to pay what we’ve been paying for quite some time.”

The board’s next meeting will be on Jan. 14 at Twin Oak Elementary School. It will begin at 6 p.m.